Intel Looks Beyond Traditional Markets; Intel’s Newly Appointed President Renée James Talks About Embracing Market Trends in Asia and Plans for the Company’s Growing Cash Pile

Intel Looks Beyond Traditional Markets

Intel’s Newly Appointed President Renée James Talks About Embracing Market Trends in Asia and Plans for the Company’s Growing Cash Pile

YUN-HEE KIM

Nov. 24, 2013 1:13 p.m. ET

Technology companies are looking beyond traditional PCs, smartphones and tablets to drive growth in the next decade, and Intel Corp. INTC -5.39% wants to be ahead of the curve. The Santa Clara, Calif.-based semiconductor maker, which initially lagged behind rivals in mobile computing, is developing chips that can be used in wearable devices and placing more emphasis on software and services to drive growth. The moves are important because Intel, which has traditionally focused on chips for personal computers, expects next year’s revenue to be flat because of weak PC sales.In an interview with The Wall Street Journal on a recent visit to Hong Kong, Intel’s newly appointed President Renée James talked about embracing market trends in Asia and plans for the company’s growing cash pile.

WSJ: What do you think are Intel’s biggest challenges today?

Ms. James: Time is speeding up in computing. We have to push even harder and faster than we have in the past. From data centers to ultra-mobile devices such as tablets, phones and wearables, computing segments are undergoing exciting and even game-changing transitions. To address these transitions, in addition to Intel’s traditional areas of strength, increased integration will be Intel’s future and we plan to leave no computing opportunity unserved.

Since August, for example, we have introduced more than 40 new products for market segments from the Internet of Things [a network of smart devices that communicate with each other with little human intervention] to data centers, with an increasing focus on ultra-mobile devices and 2-in-1 systems.

WSJ: Ten to 20 years from now, do you think Intel will continue to be known as the world’s biggest semiconductor maker, or will it be increasingly focused on becoming more of a software and services-driven company?

Ms. James: It is our goal to remain the leading semiconductor manufacturer and expand our offerings beyond silicon to solutions that include silicon and software/services. That doesn’t take away from our focus on semiconductors, they go hand in hand.

WSJ: Intel has been working on an Internet TV. When can consumers see it?

Ms. James: We continue to do trials and evaluate the product. We really don’t have a new update.

WSJ: How do you stay ahead of the innovation curve?

Ms. James: Intel will do more in services and software, especially in places like security…probably making your online experience safe. That’s something that you might not associate with Intel, but you’ll see more of that in the future.

Some of the products that we go into will be wearable technology, watches. And you might see our name. Our ambition is to enable the industry to build great products, and we are happy to have our name on them with our customer’s name.

WSJ: Intel has been codeveloping a mobile operating system called Tizen

with Samsung Electronics Co. 005930.SE +1.31% Why is there a need for a third operating system beyond Android and iOS?

Ms. James: We have always been a large contributor to open source. We’ve worked on most of the mobile Linux operating systems and we worked on Meego

[the abandoned mobile operating system Intel was developing with Nokia Corp. NOK1V.HE +0.76% ], and in the end it was a helpful attempt in what Tizen has become. But of course, there was a change in strategy at Nokia.The operating system isn’t as important as the application system. There is room for a third OS. But it also requires that you have the strength of a company like Samsung who can really introduce to users a new experience because they build a complete phone and they have the user experience so they have the possibility of making it happen.

WSJ: What’s the major challenge of Tizen? We have yet to see a Tizen phone from Samsung.

Ms. James: It’s just a matter of application adoption. It’s up to the developers. That’s the biggest challenge.

WSJ: More of your clients are working on wearable devices. That means semiconductors have to be smaller and built differently. How is Intel preparing for this emerging trend?

Ms. James: We’re working on smaller and more integrated products all the time. The products that we are building now are so small that they can fit behind any kind of screen. We announced a product line that we’re already working on called Quark for wearables and a whole bunch of emerging devices. They have more sensors and a little bit of graphics. We are building different products now for different kinds of devices. That’s something we weren’t doing before.

WSJ: When will Quark chips ship?

Ms. James: We’ve been talking with our customers. It’s for products shipping in 2014.

WSJ: Intel’s cash pile is growing with more than $11 billion at the end of the third quarter. Will you look at more acquisitions?

Ms. James: We look at acquisitions all the time. That’s an ongoing evergreen process for us and we’ll continue to do that. Historically, we’ve done quite a few in this area. There’s no change in our strategy. We just keep looking. We spend a lot of time at looking at opportunities in security. We’ve made subsequent acquisitions beyond McAfee in the area of security. There’s nothing new to announce but it’s an area that we’re interested in. We also have a pretty strong equity investment in Asia and we use that as a way to help foster small companies or work in the community around our platforms.

WSJ: What trends in Asia are you seeing that you want to get Intel more involved in?

Ms. James: There is a dynamism in form factors in Asia that won’t be obvious to people that don’t spend time in this region. The popularity of phablets—or the convergence of tablets and smartphones—is just one of several examples.

We’re embracing these emerging market trends in this region and have continued to deepen our integration with existing customers in Asia and open opportunities with new ecosystem partners in China—tackling new form factors and new price points. For example, we’re working closely with several ODMs [original design manufacturers] on entry-level Android mobile devices.

WSJ: What are the opportunities for Intel in China? Is there increasing innovation in the country?

Ms. James: We’ve seen tremendous movement and innovation at lower price points. There has been a surge of development within a new set of partners in southern China, known informally as the China Tech Ecosystem. This has opened up new possibilities for Intel for growing the footprint of Intel technology-based mobile devices that span all price points. This work differs from more established relationships in Taiwan and Korea. We are helping these new players.

WSJ: You’re a rare top female technology executive. Are you seeing shortages of women engineers?

Ms. James: There is a shortage of women engineers. It’s hard. And the really good ones command a premium and they can move around. It’s true in China too. It’s just as great in Asia and in China as it is in Silicon Valley.

WSJ: Any management tips?

Ms. James: I would say be as direct and clear in your communication as possible. Clarity really helps people follow where you’re trying to lead them.